WASHINGTON (Reuters) - A key Republican in the U.S. House of Representatives plans to reintroduce legislation soon that would wind down mortgage finance giants Fannie Mae and Freddie Mac within five years.
Representative Jeb Hensarling told reporters “five years is the right time” to wind down the two firms, which are now under the conservatorship of the U.S. government.
Hensarling, the fourth-highest ranking House Republican and a vocal critic of Fannie Mae and Freddie Mac, said he is open to arguments for changing the timetable, though he has not heard anything yet that would cause him to take a slower approach.
“What is absolutely nonnegotiable is getting the taxpayer off the dime and ensuring that these are no longer government sponsored enterprises, implicitly or explicitly, or in any single way,” Hensarling told reporters on Capitol Hill.
The two firms have taken more than $150 billion in direct taxpayer aid since then-Treasury Secretary Henry Paulson seized them in September 2008 as loan losses mounted.
Hensarling still aims to end the conservatorship of Fannie Mae and Freddie Mac within two years of passage, as his original bill, which did not pass when Democrats controlled the House, proposed.
Under his proposal, Fannie Mae and Freddie Mac would then enter receivership or be placed back into the market for a maximum of three more years.
Hensarling’s proposal continues to rely exclusively on the private market for the role now played by Fannie Mae and Freddie Mac.
Republicans have softened their rhetoric surrounding Fannie Mae and Freddie Mac since taking control of Congress from Democrats earlier this month.
Treasury Secretary Timothy Geithner is expected to unveil the Obama administration’s proposal for what to do about the two firms in the coming weeks.
Hensarling made the comments as the American Enterprise Institute, a conservative think tank, was releasing its proposal for “Taking the Government Out of Housing Finance”.
AEI is pushing back against some outside proposals advocating the creation of new firms to replace Fannie Mae and Freddie Mac by guaranteeing certain types of mortgages.
The government, including Fannie Mae, Freddie Mac and the Federal Housing Administration, now backs in some form more than 80 percent of U.S. mortgage originations.
Editing by Padraic Cassidy